The rights exercise price is $0.90 i.e. 10% discount to the current price at $1 and current dividend yield at ...
...Read? REITs and rights issues: Dilutive or not?
Investor A's ROC will be dilutive relative to Investor B's ROC
No need to manipulate the numbers.
Just try to key in any reasonable number for earning, nil-paid rights, discount rate etc into the worksheet and the result will always be the same. ROC of Investor A will always be lower than the ROC of Investor B. Maths is not biased when the same set of numbers is applied to both investors.
Let continue with the Maths:
Assuming Investor A will always sell his entitled nil-paid rights and Investor B will always fully subcribe for his entitlement of nil-paid rights.
After three rounds of cash calls, relative difference in ROC between Investor A and Investor B is slowly becoming more obvious.